Thursday, August 4, 2011

Lira Tumbles as Market ‘Baffled’ by Turkey’s Shock Rate Cut

Turkey’s lira tumbled toward the weakest close against the dollar in more than two years after the central bank unexpectedly cut its benchmark interest rate by a half point to a record. Stocks fell the most in five months.The lira lost as much as 2.7 percent and was down 2.4 percent at 1.7357 as of 5:37 p.m. in Istanbul. A close at that level would be the lowest since March 2009. The ISE National 100 Index (XU100) of shares retreated for a fifth day, losing 3.2 percent lower to 59,325.99.

Policy makers reduced the one-week repo rate to 5.75 percent to help shield the economy from the effect of Europe’s debt crisis and slowing growth in the U.S.